HHS Announces New Initiative for Accountable Care Organizations

The U.S. Department of Health and Human Services (HHS) announced Monday a new Pioneer accountable care organizations (ACO) initiative with 32 health care organizations participating in an effort that could save up to $1.1 billion over five years.

As part of the program, the health care groups, which reside in 18 states and serve about 860,000 Medicare patients, will be rewarded based on their proven ability to improve care while lowering their costs. The Pioneer ACOs have been specifically selected because of a history of coordination among their health care providers -- including primary care doctors, specialists, hospitals and others -- in caring for senior patients, according to HHS.

The initiative is primarily geared toward testing new payment models to slow the growth of Medicare costs. Groups "that are successful in achieving better care and lower cost growth" will be allowed to transition from a fee-for-service payment model to a system based on the value of care provided. Protections are included for Medicare beneficiares, such as the right to seek care from a provider of their choice, the department said.

For the first two years, the providers participating in a Pioneer ACO will operate on a shared savings/shared losses payment model, which will be measured against previous Medicare expenses for patients being treated at the ACO, according to HHS. In the third year, the ACO will move to a population-based payment system, which is a monthly per-patient payment to the ACO from Medicare, intended to replace some or all of the previous fee-for-service payments.

To evaluate the participating ACOs, HHS will analyze data regarding the utilization of services and compare the health of patients being treated at particpating ACOs versus comparable Medicare beneficiaries who are not. HHS will also use quality measures from the Medicare Shared Savings Program to judge the ACO's success.

For a full list of the 32 participating health care organizations, please visit the HHS website.